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The industry is preparing for rapid change

The industry is embarking on unprecedented changes through digitization and technologies such as artificial intelligence. To master them, it has begun budget shifts and conversion programs, according to a McKinsey study.

In total, 300 top industry decision-makers were surveyed. According to this survey, 85% of executives in the automotive industry, mechanical engineering, aerospace and defense industry expect technological breakthroughs to completely
change their business
. Three-quarters of them indicate the speed of change as an essential factor. In contrast to earlier leaps in development, not only the technology but also the underlying business model is changing.

Specifically, the auto industry derives $30 billion in revenue from mobility services. This is expected to increase to almost 400 billion by 2025. Cybersecurity is also very popular: The market could more than double in the next seven years from $96 billion to $210 billion.

What needs to be done? More than half of the companies surveyed expect they will have to restructure 20 to 30% of their budget. A majority also assume that 10 to 30% of jobs will change. Six out of ten companies have already launched programs, while a third have set up startups to handle the change. But for long-term success, the conversion has to be done “on scale,” in other words, on a large scale according to the consultants.

Despite the challenges, every second company surveyed expects increasing sales for the industry as a whole, a result supported by a study from
Horváth & Partners
. So far, only half of the 200 managers interviewed were able to record the first increases in sales through digitization. However, almost all of them have already been able to increase their productivity or reduce their costs.